Cryptocurrencies have broken fundamental supports. What's next?

The cryptocurrency sector has had a truly dramatic weekend, although since yesterday we have seen an attempt to unwind demand among digital assets. Bitcoin slid below the key $20,000 level over the weekend and was even trading below $18,000 for a while. The 'king of cryptocurrencies' pulled Ethereum with him, which slipped below the psychological limit of $1,000 and has been performing exceptionally poorly recently:

• Bitcoin's price fell below the record price levels of the previous bull market for the first time in the history of past cycles;

• Cryptocurrencies as risky assets are losing out in the face of monetary policy changes, the specter of recession and turmoil in the global economy. Bitcoin has not proven to be a hedge against rampant inflation;

• Janet Yellen met with Wall Street bankers last Thursday to discuss, among other things, regulation of the cryptocurrency industry. Potentially, the scale of fraud and the industry's internal problems could help to increase the pace of regulators;

• The largest stablecoin (a cryptocurrency that mimics the price of a real-world asset) Tether USDT on Saturday once again lost correlation with the U.S. dollar in the face of extraordinary market conditions, fueling concerns about the cryptocurrency's future. The potential collapse of Tether could lead to a massive panic in the market. So far, the project has repeatedly stirred controversy by, among other things, failing to disclose reserves and management. Over the weekend, Tether reported that the project's homepage was the target of a DDOS hacking attack;

• Three Arrows Capital fund commonly known as 3AC has fueled concerns among market participants. There have been reports of possible liquidation of billions of USD in cryptocurrencies by the managers. The fund failed to adequately protect deposited client funds from market risk;

• Celsius, a decentralized platform described as a cryptocurrency bank that manages nearly $18 billion in digital assets and has more than 1 million customers still does not process transfers and withdrawals, fueling the negative sentiment persisting in the market;

• Investors in Solana's blockchain have reason to be concerned. Total Value Locked (TVL), the number of blockchain locked reserves has already fallen by nearly $870 million over the last 3 days;

• Decentralized protocol 'Solend' created a vote over the weekend, putting the community in a dilemma. The developers want to take over the portfolio of one of the large holders of the so-called 'whale' to avoid its potential liquidation, which could pull down valuations and burden Solend's lending platform with debt ; eventually this could affect the collapse of the entire Solana network. Faced with internal problems, the network's managers may confiscate tokens held by clients;

• The popular Tron cryptocurrency created by Justin Sun to monetize content creators through blockchain technology is having a rough time. Over the weekend, we saw another 'depeg' of Tron stablecoin i.e. USDD, which lost correlations with the US dollar by up to 7%;

• A group of individual US investors have sued Elon Musk for promoting a pyramid scheme in the form of Dogecoin and are demanding nearly $250 billion from the billionaire. Despite this, Musk made a post on his Twitter over the weekend in which he pledged to continue supporting Dogecoin. The cryptocurrency's exchange rate reacted with a nearly 20% increase;

• There are still unconfirmed reports circulating in the market about the massive purchases of the Binance exchange, which was expected to make a purchase of nearly $2 billion in order to stabilize the price of Bitcoin and stop further declines;

• In the past, periods of panic in the cryptocurrency market have proven to be the best time for bulls. Bitcoin is nearly 70% below its historical highs, Ethereum is losing even more. The price of Bitcoin is back above $20,000, Ethereum is also back above $1,000. A number of indicators indicate that the current market situation is an 'opportunity; which may encourage buyers to return to the market. Having said that, cryptocurrencies as a young market have not yet had the opportunity to be tested in such extreme economic conditions as the current one, thus relying solely on historical data may be misguided.

Bitcoin (BITCOIN) trading chart, W1 interval. Last weekend brought huge sell-offs of the largest cryptocurrency and now BTC is trying to permanently return above the $20,000 level. In long-term terms, the current levels seem to be crucial for analyzing the further behavior of BTC, due to the crossing of the peak of the last cycle, which has not happened in the past. The RSI indicator is trying to bounce from record low levels. Source: xStation 5